Mittelstandsbank attained a solid result in a challenging market environment. The operating profit declined
in the 2015 financial year to EUR 1,062 million (2014: EUR 1,224 million), yet remains at a high level. The
fourth quarter accounted for EUR 212 million (Q4 2014: EUR 251 million). The full year revenues before loan
loss provisions declined to EUR 2.7 billion (2014: EUR 2.9 billion). This development is due in particular to
the downturn in deposit transactions, which was driven by the negative level of interest rates on the market
as well as the depreciation of a shareholding.

“There are considerable costs associated with negative rates. In 2015 alone, narrowing deposit margins resulted in a cost of more than 2 billion kroner ($302 million)".

Many will not be sympathetic to this. "If they don't want to pay negative rates on deposits at the central bank", goes the popular thinking, "they should lend the money out".

Indeed, individual banks can avoid paying negative rates on excess reserves. They can discourage customers from making deposits; they can choose to hold reserves in the form of physical cash; or they can increase new lending (not refinancing), since the balance sheet result of new lending is replacement of reserves with loan assets.*

But of course the reserves do not disappear from the system. They simply move to another bank, which then incurs the tax. The banking system AS A WHOLE cannot avoid negative rates on reserves. The reserves are in the system, so someone has to pay the negative rate. If banks increase lending to avoid the negative rate, the velocity of reserves increases. It's rather like a game of pass-the-parcel.

Now of course it is not quite that simple. In monetary systems that have required reserves calculated as a proportion of eligible deposits, increasing lending increases the proportion of total reserves that are "required", and thus reduces the proportion of total reserves on which the negative rate is payable. This is true in both the US and the Eurozone. So in these systems, increasing lending IS a way of reducing the impact of negative rates. The ECB says that since negative deposit rates were introduced there has been some increase in lending. Is this due to negative rates, or due to QE, or due to general improvement in loan demand as the economy improves, or due to restored banks loosening credit criteria? We do not know. Perhaps it is all of them.

It seems reasonable to suppose that negative interest rates might increase loan demand. Negative interest rates on reserves put downwards pressure on benchmark rates and thus on bank lending rates, attracting those who would otherwise be priced out of borrowing. But typically those are riskier borrowers. We have just spent eight years forcing banks to reduce their balance sheet risk. Do we really want to force banks to lend to riskier borrowers? Of course, tight underwriting standards could be used to deny those people or businesses loans: but doesn't that rather defeat the purpose of negative rates? It's something of a double bind.

It's also worth remembering that risky assets tie up bank capital. It is not clear that the return from lending to riskier borrowers in a very low-rate environment outweighs the cost of capital required to support them. If it does not, then banks will choose to bear the negative rate rather than increase lending. They might even raise interest rates to borrowers to cover the cost, or pass the negative rate on to certain groups of depositors.

That said, there is a wider market effect of negative policy rates that could benefit banks. Negative policy rates (deposit and funding) depress the short end of the money market yield curve. All short-term rates respond to this, so we would expect most demand deposits to carry a negative rate, along with short-term risk-free securities. The steepening of the curve should improve the margins of all financial institutions that make money from maturity transformation. For banks this is an encouragement to lend longer-term, offsetting the margin squeeze at the short end of the curve. And when the central bank is actively depressing longer-term rates with QE, negative rates could actually protect bank margins by preventing the curve from flattening.

There is a second protective effect for banks, too, pointed out by Bloomberg in the piece cited above:

Fewer customers default on their loans when borrowing costs sink, and that means banks suffer fewer impairments. After writing down 853 million kroner in the fourth quarter of 2014, Danske wrote back 139 million kroner in the final three months of 2015. For all of last year, impairments were just 57 million kroner, compared with 2.79 billion kroner in 2014.

Downwards pressure on interest rates acts as a form of forbearance. But again, we have to consider whether this is what we really want. Do we want banks lending to high-risk borrowers at artificially low interest rates, and reducing provisioning against existing risky loans? What would happen when we raise interest rates again?

But the banks insist that despite all this, their margins are squeezed. And the reason appears to be their own reluctance to pass on negative rates to depositors. Indeed, the Bloomberg piece headlines with "Negative rates costing billions won't hurt clients, says Danske". And it finishes with this:

"Negative rates clearly create a pressure on net interest income for the banking sector, and Swedish banks are not an exception,” according to Uldis Cerps, the agency’s executive director for banks.

That said, Swedish banks are “better positioned” because of their “good profitability,” Cerps said. That “increases their capacity to absorb further NII reduction.”

So at present, the expectation is that banks will absorb the cost of negative rates. There really is a margin squeeze. Clearly, only stronger, better-capitalised banks will be able to afford this, and they will offer more attractive rates both to depositors and borrowers. For customers, this margin squeeze looks attractive. But for banks, it looks like a cut-throat competitive spiral in which only the strongest - or those with the strongest government backing - will survive.

It also raises serious questions about the relationship of banks to the wider economy. Negative rates are effectively a tax on deposits, and as such are intrinsically contractionary. They are a form of financial repression. As long as banks choose to absorb that tax themselves, those who pay that tax will effectively be bank shareholders and employees. But if banks choose to pass that tax on, it will be savers and borrowers who pay the tax. Would the increased economic activity that negative interest rates may generate be sufficient to offset the effect of this tax?

Alternatively, if we think of negative rates as a monetary operation rather than a tax, we can say that the central bank drains back a small proportion of the reserves it adds to the system through QE. This is monetary tightening. Again, would the increased economic activity generated by negative rates be sufficient to offset this effect?

I do not know. And I do not think anyone else does either. But one thing seems clear. How negative rates would work in practice is no clearer than how QE works in practice. They are experimental, and their effects are complex. Hydraulic monetarist arguments ("if you can get rates low enough the economy will rebound") are simplistic.

I suspect that the principal effect of negative interest rates (especially in combination with QE) will not be to increase bank lending but to depress the exchange rate. And when everyone is depressing the exchange rate, there is an unpleasant race to the bottom and global trade grinds to a halt. We have played this scene before. It did not end well last time. Why do we think this time is different?

* Yes, I know banks create deposits when they lend. But for the purposes of this post I have conflated the two steps of lending, which are loan & deposit creation followed by loan drawdown. After step 1, there is indeed a new deposit which balances a new loan asset. But after step 2, the new deposit has disappeared along with an equivalent amount of reserves (asset), leaving only the loan asset.

Comments

I think the effects of lowering interest rates into negative territory would be the same as lowering them from positive territory or rather bigger, if banks would pass them on to the customer. That they in fact don't seems to do this defies economic logic but should be recognized as it is important. If banks would lower the deposit rates into negative territory, i m pretty sure lots of depositers would go searching for yield (everyone hates losing) and put a lot more money into risky assets like stocks or spend more money. It would also benefit banks and their balance sheet as they usually as you say, borrow short and lend long. As the latter has already happened to some extend, their lending rates are somewhat fixed while their borrowing rates would be lower.If the passing on of negative rates for some reason does not happen, negative rates will indeed squeeze bank capital somewhat while not having any positive effects on customer behavior. In this case the effects on the economy will be unclear imo.Maybe the rates have to be low enough so the ice is broken and banks really have to go negative on deposit rates.

Or perhaps the middle-class, which has experienced over one decade of stagnant wages, would respond to negative rates by placing some of their cash into their safety deposit box, and offsetting the "tax" by spending less than they would, were it not for NIRP.

"In monetary systems that have required reserves calculated as a proportion of eligible deposits, increasing lending increases the proportion of total reserves that are "required", and thus reduces the proportion of total reserves on which the negative rate is payable."

"The banking system AS A WHOLE cannot avoid negative rates on reserves."Strictly speaking this may be untrue. They can, long term, if the negative rates on reserves are tiered. That is, banks create money (via loans), but they can also extinguish money (via not recycling repaid loans). Of course, the effect is that the money base shrinks (so in effect the same as if they had negative rates).

Which it would also if the banks could not create/extinguish money. I believe that in effect, negative rates become a game of musical chairs - who ends up with the reserves today? That in theory should encourage lending, but that has two problems.

As I said above, bank create money by granting loans. If they increase the quantity of money within NIRP, they will, ultimately, increase the price they pay for it. Hence it's rational not to lend (and create more money). Of course, you could make an argument that if the banks are sure that the money they create end up as someone's else reserves, where that someone else will have to pay NIR, they help themselves and hurt the competition at the same time - but I doubt anyone (or any reasonable size) can really guarantee that.The second problem, even if we had a system where banks don't create money, this game of musical chairs would encourage reckless lending. In effect, you're given two choices - you can be guaranteed to lose money (via NIR), or you can take a punt where on one side you lose a bit more money, and on the other you make much more money. Guess what.

BTW, you are the only one who makes the argument about the steepening of the curve. I've been banging on this drum for a while - there has been saying how NIR impact NIM, as if they automatically decreased NIM. NIM depends in its entirety on the shape of the IR curve and the maturity distribution of the interest bearing assets bank has. Let's say that banks fund at (weighted) average of 3m, and lend at (weighted) average 3y. What matters then is not whether 3m rate is negative, but the slope between 3m and 3y points. And that has been brought down (intentionally!) by QE. So QE had a much bigger impact on the banks' profits than NIRP.

Overall, I agree with you that NIRP is contractionary rather than expansionary. The only way that NIRP would be expansionary was if the banks themselves were able to borrow from CB on negative rates (while say paying the same rates on reserves, so net net nil impact of reserves), and ideally pass the negative rates to real world borrowers. Of course, this would hurt savers a lot (which could be paradoxically expansionary, as you'd be better off spending your savings), and likely, with how the system is set up, create more asset bubbles.

Otherwise, NIRP is just a fudge for attempts to manipulate the currency.

Can’t central banks implement negative rates in other ways to mitigate this problems, e.g. by putting the repo rate to negative (i.e. paying the banks for posting collateral, rather than ‘taxing’ them)?

Frances Coppola, I didn't find contct page on your website.... I'd like to ask you - Can you sometimes post paid artciles on our website http://www.profitf.com/ If yes, please contact with us ..... Thank you ;-)

Withdrawing high denomination bank notes would seem the next step to make holding cash inconvenient in a negative interest environment. GDP reduction once the calculations of illegal activities in the economy made more difficult?

Cash transactions are used in the main to bypass usury taxes (although of course not consumption taxes)The state bank is as always engaged in a holy war on civilization.As I have said demurrage in conjunction with credit banking is a induced famine policy, sadly predictable when observed with social credit eyes, We are witnessing a social debit policy to sustain or increase concentration of power.

Frances, why should NIRoR lead banks to cut their lending rates? If a bank doesn't expect NIRoR to result in any saving in their interest expense (if it can't pass NIR on to depositors), then surely it won't do anything to lead to a cut in its interest income. In other words, it will act to preserve its NIM by increasing lending spreads.

Anders, this would only be true in a tight lending market where borrowers have no alternative sources of funds. So, for example, when the Bank of Engand cut base rate to 50bps in 2098, banks took the opportunity to increase magus on variable-rate mortgage lending. In the UK, SVR mortgages are typically priced as base plus margin. Before the crisis, margin was less than 1%. Now it is 2-3%. But this was only possible because of the UK's tight property market. In countries that suffered serious property market falls, or where mortgage rates are more closely aligned to capital market rates, this would not have been possible.

But that's true regardless of whether we're at NIRP, ZIRP or PIRP.If there's slack in lending markets, banks' profits are down by default, and so are if the borrowers can go elsewhere (and presumably borrow at better rates/conditions than from banks).

At the same time, the latter (ability to borrow elsewhere) depends heavily on the shape of the funding curve. NIM is then a function of funding curve (in effect supply) and loan demand. The steeper the funding curve, and the higher the demand, the higher NIM, although the interplay is non-trivial I believe.

The failure of CBs is to think that the credit supply is driven purely by the short-end rates, be their negative or whatever. It's really driven by the shape of the curve, and to some extent how much of the curve is positive (that assumes unwillingness to push negative rates on savers).

In theory, one could argue that the shape of the curve is driven by short rates (in effect doing an IR swap), but I believe that this fails with negative rates, as in effect no-one would enter an IR swap that one side would both pay fixed and pay (negative) floating at the same time, and know this at the inception. That is, unless the fixed becomes negative (which would likely have impact on the saving rates). So, if you'd want to see some impact, you'd have to drive IBORs negative.

Frances - I could understand if you were considering lending rates in isolation, and saying that increased slack in the lending market means that rates need to fall. But why should a slack lending market lead to NIRoR having any impact on lending rates?

I tend to think lending rates are set as some composite of (a) funding costs + target NIM and (b) whatever a bank feels it can get away with. But even if you believe they are set simply at funding costs + target NIM (let's say banks seek to maintain target NIM in order not to be too greedy and lose market share), then if NIRoR don't lead to a fall in funding costs, why should NIRoR _per se_ lead to a fall in lending rates?

In other words, we aren't talking about passing cost savings on to customers here.

banks sometimes do lend outside the system. In contrast with negative rates in Denmark, Germany and Switzerland, the banks can lend in other EU countries lacking negative rates; or in places such as Brazil and Turkey, where interest rates are truly generous

"Indeed, individual banks can avoid paying negative rates on excess reserves. (...) they can choose to hold reserves in the form of physical cash"

Wouldn't this lower the total amount of reserves in the system? Reserves are exchanged in favor of cash (just like normal depositors would do in case of too negative deposit rates). Or are vaults too expensive?

No, if the risk is in the underlying cashflows, but maybe yes if we do overreact to the risk of collateral. Should we see collateral as a financial market instrument with risk it has to be sold with a loss? I can only follow that argument if you give loans to high risk borrowers with risk in the underlying cashflows, not for a company with solid cash flows.

But it is not only a risk issue, but also a lot of profit they can make on the loans. Regulation makes small loans not interesting anymore. They are to expensive, what is not a high risk issue.

Of course negative rates are a tax on deposits. Duh. But so is higher inflation.

Deposit rates lower than inflation are a tax on savings (i.e. negative real rates). That is the idea of monetary stimulus using interest rates as a tool: increase taxes on savings to incentivize consumption. Negative real rates mean lower (immediate) real interest income.

The question is *always* “would the increased economic activity generated by negative rates be sufficient” to offset the decline in interest income – the fact that deposit rates are positive or negative is irrelevant. The pricing power of banks to pass through negative real rates is irrelevant.

There is nothing particularly special about interest rates being negative. Low/negative real rates are what drives the notion of using interest rates as a policy tool.

The reality is that you can achieve the same thing (real interest rates very low or negative) using a higher inflation target, or negative nominal rates.

You are talking about the good old-fashioned monetarist hot potato effect, when people have too much money and try to get rid of it by spending it. Only in this case it's the banks who have too much high-powered money and try to get rid of it by lending it. And if the banks start paying negative interest rates on demand deposits, that is what creates an additional hot potato effect, among the public.

Haha. I called it "hot potato" when I wrote about this in 2012. You surely weren't expecting me to be so boring as to use the same term twice? IIRC I also said I could see this resulting in all manner of stupid investments. More lending is not necessarily good lending.

I agree with most of this post. The bit on taxes raised my hackles though, but you are in good company since Tyler Cowen got my hackles up too over the same thing in a post from last week. You said:

"It also raises serious questions about the relationship of banks to the wider economy. Negative rates are effectively a tax on deposits, and as such are intrinsically contractionary. They are a form of financial repression."

Milton Friedman advocated interest on reserves many decades ago because the requirement that banks get nothing on their central bank deposits when the overnight rate was, say, 2% constituted an inefficient tax on banks. The distance between interest on reserves and the overnight rate (say the fed funds rate) measures the size of the tax, and Friedman wanted this gap to be equal to zero.

By this definition negative interest on reserve needn't be a tax as long the distance between the negative IOR and negative overnight rate is zero. In fact, we can argue that central banks like the SNB are actually subsidizing banks rather than taxing them since they are charging 0% on a large proportion of reserves when the overnight rate is significantly below that.

Of course, you and Tyler may be using the word tax in a different way. But I am having problems triangulating what this meaning is. Incidentally, Scott Sumner brought up the same point here with respect to Tyler:

It depends on the particular regime operated by the central bank, but in any excess-reserves environment where the funding rate is above the interest on excess reserves rate, the difference between the two is effectively a tax. However, this would apply even if both rates were positive. It's just more obvious when the deposit rate is negative.

I don't think required reserves are of much relevance in the Eurozone. The ECB's reserve requirement is very low, and it remunerates required reserves at the MRO rate anyway, so the gap is zero. The negative rate on the deposit facility is well below the MRO rate, so for any bank holding excess reserves (and some banks must, since the system as a whole has excess reserves) the negative rate is a drain.

In the US, which has a rate-targeting (rather than rate-setting) regime, we would expect the difference between IOER and the Fed Funds rate to be arbitraged away. In practice it isn't, fully, though this is partly due to the FDIC levy. The Fed now uses ONRRPs to stop the gap getting too large.

The SNB's policy is indeed generous to banks, since the target funding rate is well below zero while the required reserve rate is zero, but none of the major CBs do this - although as Japan's structure is modelled on the SNB's and is explicitly to protect bank margins, we may yet see Japan going down this route.

The Bank of England has no required reserve policy at present and remunerates all reserves at Bank Rate, so lending and deposit rates are the same. Libor is typically above Bank Rate, so banks funding at Libor would pay a small negative spread on reserves they can't on-lend. But then why would they do this anyway? QE and its relatives have pretty much killed the interbank markets.

Of the countries that have gone negative - Sweden, ECB, Denmark, Japan, and Switzerland - three of them provide a subsidy. The Bank of Japan lets banks earn 0.1% on the majority of its reserves, Switzerland provides exemptions, and Denmark lets bank invest in certificates that yield 0%, all while overnight rates are much lower. So are negative rates a repressive tax? Seems like the opposite to me.

You have to look at the reason for negative rates. In the case of both Denmark and Switzerland, the principal reason is to prevent the currency appreciating as capital leaves the Eurozone in response to the ECB's downwards pressure on rates. This is particularly important for Denmark, which has to hold the ERM II peg. The negative interest rate in both these countries is thus a response to ECB monetary policy. I've been rather amused by the way in which negative rates are being used both as domestic AD stimulus and to defend against unwanted external AD stimulus.

I'm not sure I follow. Irrespective of the objective, how does this change the nature of the subsidy? The SNB, BoJ, and Danish national bank could have offered no exemptions whatsoever, but they chose to do so. Where is the intrinsically contractionary and repressive tax?

'Hydraulic monetarist arguments ("if you can get rates low enough the economy will rebound") are simplistic.'

According to S.S..

"In a monetarist model, lower market interest rates are contractionary for any given monetary base, because they reduce velocity. It’s the Keynesians who are likely to claim that lower rates are expansionary."http://www.themoneyillusion.com/

Negative interest rates can exist on several levels, but are really simple to understand. Think of negative rates as dissuaders. Their purpose is to dissuade holders or potential buyers from either holding or buying.

Level I - between central and member banks.If a central bank is charging a negative rate to its member banks, it is desiring that the banks no longer park their available funds with them. The central bank instead wants its members to use the funds in the purchase of productive investments, or in the loaning out of funds to stimulate a troubled economy. [Adding liquidity to the system.]

Level II - between banks and their customers.If banks are charging customers for holding funds, then they want the customers to withdraw their funds and spend them to boost the economy, or to purchase securities. [Increasing spending in the economy stemming from a savings drawdown {dishoarding}.] (Also, it should be noted that the easiest way to extract money from an economy being bombarded with monetary increases by the central bank is through purchase and sale of rising equities, dividend payments, or bond interest.)

Level III - between popular financial instruments and foreign holders or potential foreign purchasers.If the negative rates have been extended to popular domestic financial instruments, the purpose is to dissuade foreigners from either holding the instruments or purchasing them. This will put a downward pressure upon the price of the domestic currency and assist exports in remaining competitive and guard against "hot money" inflows. [Keeping the domestic currency from appreciating & avoiding "hot money" inflows.]

An unintended consequence of negative rates is hoarding. Why spend money to jump start a moribund economy when one’s own financial situation is uncertain? It’s better to conserve one’s precious funds by placing them in a lock box, under a mattress, or under some inconspicuous rock in the back yard. However, abandoning physical currency in favor of digital money will make everything crystal clear to the tax collector, allow for easy fund confiscation as in a wealth tax, and guarantee that negative rates will result in spending, or else!

In the absence of digital currency, some form of negative rate aversion will occur. This cannot be good for the banking system, as it will ultimately drive the depositors to other venues, which will certainly have to reduce commercial activity – sort of a reverse-“Lombard Street” phenomenon. It should be noted that negative interest rate ploys are a severe measure, applied only when all else has failed. They are short-term measures enacted by desperate bankers, and to me, signify the arrival of one or more monetary regime endgames. They are NEVER good news to anyone at all!

Negative interest rates in practice will bankrupt pension and insurance company portfolios, money market funds, destroy the savings-investment mechanism which provides fuel for economic growth, wage financial war against the old, rob the young of a rationally planned future, destroy the banking system, create unsustainable stock and bond bubbles from the search for yield, and hopefully kick the can down the road long enough for some miracle (contradiction of the observed, forces of Nature by the intercession of the gods) to happen before the appearance of Nemesis, the Punisher.

In short, the imposition of negative interest rates is a monetary crime!

What I am guessing is that the experiment on QE did not give an effective result intended to achieve inflation targets. So now they are withdrawing the QE through a negative interest rate charged on those who received the QE package (banks). Once withdrawn, they have to come up with other ways to achieve "Quality" GDP. The main risk lies in the withdrawal/closing of the QE experiment. I'm no expert on this, just my hunch on the ongoing affair carried out thus far. Any thoughts?

Thank you for discussing this. It gives one some infromation to thing about and do sectoral accounting analysis. I was thinking negative interst might not be a great idea but that we might have had negative real interest for some time, helping debtors from loss of purchasing power of money.

"I do not know. And I do not think anyone else does either. But one thing seems clear. How negative rates would work in practice is no clearer than how QE works in practice. They are experimental, and their effects are complex."

I bet Jim Rogers and George Soros might be forming theories to test in the markt.

Central bankers around the world have been increasingly using negative interest rates to prop up inflation and support their economies, but Rogers said the moves aren't working. He said they are simply trying to rescue stock markets and help brokers keep their Lamborghinis.

"The mistake they're making is, they've got to let the markets sort themselves out," he said.

"It's been over seven years since we've had a decent correction in the American stock market. That's not normal ... Markets are supposed to correct. We're supposed to have economic slowdowns. That's the way the world has always worked. But these guys think they're smarter than the market. They're not."

“Low interest rates are destroying the people that save and invest. Pension plans, trust companies, insurance companies -- we’re destroying all the people that save their money for a rainy day and now they are being ruined… to bail out people who get it wrong -- who ran up huge debts who didn’t have the money. We are ruining the country with this idea,” he said. ---Jim Rogers

Post a Comment

Popular posts from this blog

“Will you tell me how long you have loved him?” asks Jane
Bennet, on receiving the astonishing news that her sister Elizabeth is to marry
Darcy, the rich aristocrat she used to hate.“It has been coming on so gradually, that I hardly know when
it began,” replies Elizabeth. “But I believe I must date it from my first
seeing his beautiful grounds at Pemberley.”

This is from the end of Jane Austen’s Pride and Prejudice. Austen is lampooning the British 19th
century marriage market, in which women (and men) pretended to “fall in love”
when in fact they were marrying for money. But for cynics like me, such a remarkable
conversion has echoes in the 21st century. When someone suddenly becomes
an ardent supporter of an ideology they had previously - equally ardently - opposed,
always follow the money.

So, to Sir James Dyson, inventor of cyclone-technology
vacuum cleaners and ardent Brexiteer. Sir James is frequently heard
expounding his hardline Brexit views on the BBC, which is struggling t…

“What do they teach them at these schools?” wondered the Professor in C.S. Lewis's The Lion, the Witch and the Wardrobe.

The Professor, of course, was concerned about logic. But I wonder too - not about logic, but about maths. Especially among journalists writing about life expectancy and other long-term trends.

Here is the FT proclaiming "Average life expectancy falls". This is the headline for a chirpy piece about how reduced life expectancy could make things easier for pension funds facing big deficits.

There's only one problem with this. Life expectancy isn't falling. And the report the FT cites does not say that it is.

This is how the press release from the Institute and Faculty of Actuaries summarises the findings of their report:

Recent population data has highlighted that, since 2011, the rate at which mortality is improving has been slower than in previous yearsHowever, mortality is expected to continue to improve and there is significant uncertainty…

I'm sitting in a coffee shop opposite Haymarket Station in Edinburgh. Just up the road, the Institute for New Economic Thinking (INET) is holding its conference. I'm supposed to be there, as I was yesterday and the day before. But I am not at all sure I want to go. The last two days have left a very bitter taste.

This conference, grandly entitled "Reawakening", is supposed to be a showcase for the "new economic thinking" of INET's name. I hoped to hear new voices and exciting ideas. At the very least, I expected serious discussion of, inter alia, radical reform of the financial system, digital ledger technology and cryptocurrencies, universal basic income (recently cautiously endorsed by the IMF), wealth taxation (also recently endorsed by the IMF), robots and the future of work. And I looked forward to the contributions not only from the speakers, but from the young, intelligent and highly educated attendees.